Marketing Management For Market Orientation Methods – Case Study On HSBC

Background Of The Company

Describe about the Marketing Management for Market Orientation Methods.

According to Doole and Lowe (2012), Marketing management is the process which an organization follows that focuses on the application of market orientation, methods , and management of marketing resources . Organizations that operate on an international level are quite keen on developing a marketing management plan, as it would analyse the company’s position and the ways of enhancing the position of the company. Marketing helps the organization to identify its potential customer base and create specific customer segment, and launch embattled promotional and advertising campaigns(Ferrell and Hartline 2012). Marketing strategy portrays a road map for the organization regarding the process of marketing and includes various other elements which helps in the enhancement of the company.

In this report, a case study on HSBC bank is done, that would give a detailed structure regarding the marketing strategies of the company. Information regarding the companies activities in considered, along with its market environment. PORTER AND PESTEL  analysis is conducted in order to know about the micro and macro factors of the  environment in which the company prevails (Fifield 2012 ). Marketing strategy and marketing mix plan of the company is analysed to get a knowledge regarding the objectives of the company. In the end recommendations are made to help the company to from a strong base in Australia. 

According to HSBC.com. (2016), HSBC is a multinational banking and financial service corporation that has its headquarters in London, United Kingdom. It is considered as the fourth largest bank.  Its total assets  are of us$2.67 trillion. It was established by the Hong Kong and Shanghai Corporation limited to act as a new group holding company. HSBC has 7500 offices in 87 countries all over the world. It is spread widely with around 220,000 shareholders among 124 countries. It provides a range of services like personal financial services, commercial banking, market private banking and investment banking.

The bank is mainly operated in Hong Kong, Asia Pacific region, Europe, Australia and America. Being on the fourth position with respect to its assets, almost 22% of its profits are derived from Hong Kong. It has been termed as the “world’s local bank”. It has been successful in understanding the important and function of different market all the way through the skill gained in international trade. HSBC being a global company has greatest respect for different companies . Their motto is to provide personalised services and aid to its customers that fits the specific needs.

Market Segmentation

Within Australia, HSBC has a chain of 25 branches as well as other direct channels. The growth of the company is relatively slow in Australia compared  the other countries. Most of the population is mainly focussed at the domestic banks of the country. HSBC needs an extensive framework of marketing strategies and implementation of those plans in order to expand its market share in the country

As stated by Gilligan and Hird (2012), a market segment for an organization must be conducted in order to achieve the attributes of accessibility, measurability, profitability and large size. If the chosen segment fulfills all these attributes, then creation of that segment must be considered. For a banking and financial institution like HSBC, 75% of its customer base is derived from the commercial banking in Australia. In retail banking sector, HSBC has to compete with various other banks such as commonwealth bank, ANZ bank, Westpac, Bendigo bank, etc. In Australia 77 % of teh resident assets are done by the four major domestic bank of teh country. HSBC stands at a position with only 13.4% (Ryle et al. 2015).

The current need of the hour is that HSBC needs to understand that there are various segments in the country than can be created by keeping in mind the core competency and accordingly creating the segment (Wilson and Gilligan 2012). As it eh case of commercial banking, the domestic banks have already taken its toll, HSBC must pay attention to the retail banking sector.

HSBC must focus on the age group which includes people who are just freshers, out of college or into new jobs or have entered into a business entrepreneurship. Even though the net count of these customers, would not be high, yet they would spend more in comparison with the higher age group. These is a great scope to expand their credit card services. Hence, these customers are targeted as potential customers (Hollensen 2015).

As stated by Westwood (2013), based on the segmentation done, HSBC must target the segment including the people of  age group 18 to 35 years. The segmentation done must be divided into two sub sections, where one part would be the people who are interested in the basic requirements of personal banking services, whereas, the other section could be interested  in other products such as personal banks, mutual funds, personal finances, etc. Hence, in accordance with the subsections made among the segments, HSBC must target the customers.

Market Targeting

Positioning HSBC would be considered as an important element to decide the success or failure of the extension plan. In Australia, HSBC has a collective share of only 17%, which shows that it has a long way to go in order to establish its position and declare itself as a powerful banking institution. Local factors and old beliefs have positioned the domestic banks of the country as more reliable and easily accessible institution than the other international  banks (Kotler et al. 2015). Therefore, it is important for HSBC to focus on positioning itself as a successful bank with a powerful brand name. HSBC needs to invoke its international exposure and innovative and influential banking products in order to convince the target customers.

According to Anton (2015), PESTEL analysis is aimed at determining how an organization would get affected by the macro factors of the environment. It helps to develop the business strategies, by analysing various macro factors.

Political : HSBC being a multinational company, has been controlled by various laws and regulations prepared by different governments of different countries where they are operating. The organization has been maintaining the policies made by each government which further ensures the stability  and  successful completion of business operations of HSBC (Yüksel  2012).

Economical : HSBC has been able to secure a successful economic strength in the field of banking and finance. In spite of the dangers that the company faces in various parts of the world, a good administration base of the company helps it to go beyond the struggles. It enables the company to attain an equipped economic condition and create a guard against unemployment (Riasi 2015).

Social : HSBC is highly influenced by the social conditions of different places. The primary aim  of  the company is to provide service to every society in order to provide them with facilities of the resources by HSBC. The company aims at getting a good name among the customers so that it assures that everything will be under control and customary (Ghosal 2013).

Technological: the emergent of upgraded versions of technology and internet effects the working of HSBC in the past years. The company integrates the upliftment in technology and efficiently communicates with its customers globally. Except these, HSBC also uses some advanced techniques that helps the company to raise their advancement in production and operations. It makes it easier to achieve their goal.

Environmental: HSBC acknowledges variations in governments challenging organizations to reduce their carbon footprints. HSBC has been dedicated to reduce its own carbon footprints by reducing waste, transport emissions and improve energy efficiency.

Market Positioning

Legal : increase in government regulation from the European Union, increments in capital necessities and as well as new anti-money laundering requirements means that HSBC deals with legal compliance that is costly and time consuming.

Micro factors of HSBC have been analysed using the porter’s five  forces. It is designed to help the financial professionals and other managers in order to determine the influential factors.

Potential entrants : HSBC has many competitors in Australia from the other international banks that are or have planned to penetrate into the country. In spite of receiving threats from the market, HSBC was still able to set high standards for competition.  HSBC supports a strong branding image and as it does not  have any fear from loss of customers.

Bargaining power of customers : HSBC has formed a value that has influenced the occupation from one of the two important forces customer’s power. HSBC has managed its customers as a result of allowing the company to gain customer faithfulness. This provides the company of getting a chance if being a leader in the banking industry (Peck et al. 2013).

Threat of substitutes : an important threat faced by HSBC is the threat from its competitors’ new products and services. This threat increases the urge in the organization to work hard in order to influence their position. HSBC has created four sections to focus on various customer strategies. This would help the company to understand the problems and satisfy the customers more efficiently.

Bargaining power of suppliers : the power provided to the customer mirror to the supplier power. This lays emphasis on two important points, one is the size and concentration whereas the other is differentiation of the materials being supplied. HSBC uses the strategy of price discrimination in accordance with the difference it the price paid by each buyer .

Rivalry among current competitors : there are many competitors of the banking and financial sector. HSBC uses competent strategy to maintain the control among them. As the rivals of HSBC are capable enough to raise their standards at par with HSBC, therefore, HSBC plans various strategies to confirm that they are the first choice of the clients.

Consumer’s perception towards a brand plays a major role in doing judgement for a product. Hence, it becomes important for an organization to understand the marketing strategy and analyse consumer’s perception towards that particular product. HSBC has to set up a business of foreign bank in Australia. Australia already has well known and successful domestic banks, that has  77% of the assets of the country. HSBC has transformed its identity from being a finance based organization towards a banking organization. However, a lot needs to be done in order to acquire the desired position in such a well advanced country.

Macro Factors

Various survey results shows that a larger part of the country, still has a firm belief over the domestic banks of the country, rather than the international banks. The factor that drives the force against HSBC is brand perception, and accessibility to the bank. Many people are of the opinion that HSBC is more engrossed in commercial and financial aspects of banking. This perception is due to the fact, that back in 1960s, HSBC had stated its business in Australia  as a financial organization. Hence, some of the customers still hesitate in preferring HSBC as their personal bank (Liu, Liu  and Zhang 2014).

Another important aspect of customer behaviour is the preference given to banks which are easily accessible. In the world of internet banking, there are huge number of people who prefer banks to be easily accessible. In this context, domestic banks of Australia have a greater advantage over HSBC. The branches of HSBC is quite low in comparison with the domestic banks of Australia. This is another reason for the lack of personal banking customers of HSBC in Australia (Pavlou and Stewart 2015).

It is quite crucial for HSBC to change the perception of the countrymen. In order to do so, hsbc need to portray their brand a completely an Australian unit rather than a subsidiary brand. Secondly, HSBC must plan to open new branches  in commercial as well as in residential areas. This will help in grabbing the attention of the local people of Australia.

Marketing for the financial and banking services poses different challenges for the company.  marketing mix aims at providing a descriptive analysis on the product, price , place and promotional activities of the organization. (Hassan and Craft 2012).

Product

The products is considered as the main element in a company’s marketing strategy. Poorly designed service products are not successful in generating any value for the customers. The primary aim  of the product is to create a unique service that would comparatively offer more service to the customers than the competitors of the bank. The product must be efficient enough to satisfy the wants of the customers. Keeping all the details and needs in mind, HSBC has prepared various unique featured products, such as :

Prepaid card : HSBC has planned to launch two prepaid cards namely “HSBC’s financial manager” and “ HSBC’s budget manager”. The “financial manager” manages the spending money of the customer by transferring the spending money of the bank account into the card. The “budget manager” has a smaller annual load than the financial manager. The new system of prepaid cards are free from any kind of fee and it offers the same flexibility equivalent to the debit and credit cards.

Real Time Balance Alerts : real time balance alerts are sent to every client of HSBC after every transactions made. It updates the client regarding the amount transacted and the balance that remains in the balance.

Online Banking : HSBC manages flexibility in assessing the customer’s financial possessions. The clients can access the official website of HSBC and set standing orders on the amount of money to load onto the budget every month. It implements efficiency in the function and thereby reduces effort of the customers (Peñaloza , Toulouse and Visconti 2013).

Optional Savings Account : as stated by Taleghani et al. (2012), bank customers who pay more than a certain limit at regular intervals, qualify for HSBC’s current account advance. It can be used to make regular payments or standing orders from the customer’s current account to save certain amount every month. This characteristics is ideal for the clients who have fixed income.

Price

According to Rothaermel (2015), the pricing policy of the products of HSBC must be efficient in nature as they have to look after two components. At first it must be able to attract the customers towards itself and secondly, it must be able to generate revenue for the company. There are five main components to influence the pricing decisions of a company – maximisation of profit , survival, social considerations, market share maximisation, and personal objectives. It is quite unlikely that any increase in the interest rate would  attract the clients, hence, there must be a base lending rate that provides the minimum revenue for banks and financial institutions. There must be also a fixed prepaid card fee. If the customers save money in order to gin the facilitates of the customer’s current account, the  that proves to be highly beneficial for the bank to raise capital.

The place element is very deals with the delivery of the product to its customers either physically or by using appropriate methods. Failure  in making a service product available trot eh customer would result in failure , regardless of how good the product was. HSBC has an extensive branch network and also user affable internet banking system (Stites 2015).

Promotion

As per Marshall (2014), Promotion element depend son the efficient communication system followed by the company with its clients. The main objectives of promotion is to gain clients, provide additional information regarding the products to the clients and to persuade the clients to buy the product. Advertising, newspapers, magazines, social medias and outdoor promotions must be undertaken by the company to enhance promotions of their products. Press release, brochures and posters are also effective to grab the attention of customers in order to persuade them.

The above marketing strategies give a clear view of how HSBC could achieve major success in the Australian banking industry. Currently Australia is domination by its domestic banks with a total share of 77%. The analysis shows that there is great scope for  HSBC to spread in the country and expand its services.

HSBC should emphasize  on providing high quality customer service and secured banking service to the people. In  the current situation, any organization that can provide high end services and facilities to its customers can survive in the market. HSBC needs to integrate its products, customer services and overall business and pricing strategy in such a way that it seems expedient and favourable to the people.

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